Arranging insurance as a security, investment plan

Arranging insurance as a security, investment plan

By I. Christianto

JAKARTA (JP): More life insurance companies, particularly
those partly controlled by foreign enterprises, are operating in
Indonesia, proving that more people in the country are aware of
the importance of having insurance.

Such an upswing in people's awareness about the importance of
insurance in their lives has, therefore, created a greater market
for the insurance companies, in which then aggressively launch
their services to grab more market shares.

The latest data from the Indonesian Insurance Council (DAI)
shows that the number of people covered by life insurance grew by
16 percent, to 22.76 million by the end of last year, compared to
19.58 million in 1998. Last year's figure for insured people
represents only 10.84 percent of the nation's population of 210
million.

In the first quarter of this year, DAI reported there were
14,336,059 people insured; 79 percent of this number were under
group insurance. This shows that out of a population of 210
million, 6.8 percent were covered by life insurance.

The insurance industry, however, believes the figure will
surge by the end of this year, exceeding the 1999 rate. The low
rate also shows that the market in Indonesia is very promising.

PT Asuransi AIA Indonesia vice president chief actuary and
director of marketing, Angger P Yuwono, said that the number of
new policyholders would decrease, as it had been in recent years.

"But the quality is getting better," he said.

He said the economic crisis that hit the country in 1997 had
been a kind of a test case for the financial sector, including
banking, leasing and insurance businesses.

The insurance sector survived as it works conservatively.
Meanwhile, more people put their trust in insurance instead of
saving their money in banks, he said.

He said some people had canceled their premiums held in
dollars, but on the other hand, others became new holders.

"Now, people have already become accustomed to the exchange
rate of the dollar against the rupiah. Furthermore, people have
become more aware of the importance of insurance," he said.

Benefits

Indonesians, just like people the world over, have been known
to be hesitant to take out a policy. Many consider the cost of
health insurance expensive. They do not understand the benefits.

Many Indonesians want to see physical evidence of their
purchases, something absent in an insurance policy. Many also
still do not really comprehend the concept of insurance.

Vice President Megawati Soekarnoputri urged recently the need
for a health insurance plan that gives all citizens access to
health care. The new program should be sustainable and accessible
for all people who seek health care, she said.

President Director of PT Zurich Life Insurance Indonesia,
Ronald Cheyne, said while there was no official or formal survey,
it was a fact that after the financial turmoil began to
beleaguer Indonesia, more people became life and health insurance
policyholders.

It is understandable that the crisis underlined people's
awareness about buying health and life or some other insurance
scheme. They also realize that insurance offers them benefits.

Cheyne said that Indonesia was one of the promising markets in
Asia-Pacific.

He said that based on data compiled by a research agent, 31
percent of holders who already had individual life insurance
wanted to own more, while 50 percent of the people without any
insurance thought they needed to have some.

He said that more Indonesians had participated in signing up
for life insurance for family protection and education for the
children.

Scheme

Life insurance offers protection and security planning as well
as investment. Several insurance companies offer attractive
products to try to attract more clients.

Family protection is usually one of the major reasons for
purchasing insurance. No one knows what will happen tomorrow,
what ruinous act may impact on personal finance. It could be a
killing disease such as a heart attack or a stroke, which could
cost a family immensely.

Accidents which can hamper a person's mobility and disrupt his
or her job and daily activities could also be a serious problem
in gaining income.

Nobody wants a bad experience, but who can say? That is why
insurers offer schemes to help people create investment and
protection plans.

For instance, AIA's Life Shield offers both protection and
investment in one plan.

AIA is partly owned by American International Assurance Co.,
which is wholly controlled by American International Group of the
United States.

Life Shield also offers other benefits such as hospitalization
and accident cover, including those caused by riots.

Since the depreciation of the rupiah, costs in medicine and
hospitals have surged. Therefore, life and health insurance
becomes a must to avoid the high expenses of health care.

AIA, the first joint-venture insurer in Indonesia, also offers
Life Plus, a long-term life, flexible insurance scheme in rupiah
or dollars.

Zurich, which is affiliated with Zurich Financial Services
Group of Switzerland, offers several products, including Zurich
Hospital Income, Zurich Investasi and Zurich Proteksi.

Cheyne said that Zurich also provides Zurich Link, a Unit Link
product offering transparency. Zurich is the first insurer to
introduce such a product in Indonesia.

For those seeking protection for their families, Unit Link
products would be appropriate. Now, other insurers have also
started offering such a scheme.

Zurich Link is a product for life protection allowing
customers to set their own investment choice and determine the
level of their life insurance protection. The product offers
options for customers to invest in investment funds set in
several currencies, including rupiah and U.S. dollars.

In selecting a good insurer in Indonesian, prospective
policyholders can examine company profiles and look into the
backgrounds of the owners, partners and other relevant factors.

Check the investment policy; how the insurance company
reinvests the money; the claim payment schemes; the annual
premium rates; and, what the companies offer. Read the offered
policies and review the plan descriptions. See also the benefits
of the products, such as annual bonus cash value guarantees or
other value-added services.